Dabhol

FYI

Jeff
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 01/05/2001
03:20 PM ---------------------------

Clay Harris@ENRON_DEVELOPMENT
01/06/2001 12:14 AM
To: Jeffrey A Shankman@ECT, Mike McConnell/HOU/ECT@ECT
cc: Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Daniel R
Rogers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject: Dabhol

Jeff/Mike,

I understand there is some concern regarding the take-or-pay exposure under
the LNG contracts between DPC and Oman LNG and Adgas. First, there is no
direct Enron Corp exposure. Both contracts are between DPC and the related
supplier. There are no Corp performance guarantees in either SPA. Attached is
a memo sent to Jim Hughes last month outlining the contractural obligations
and current discussions with the suppliers.

From a practical standpoint both suppliers will work with us to reschedule
the start dates and to modify the fixed quantities. I met with both
suppliers before the holidays and they reconfirmed they will work with Enron
as they understand the problems in India. We have delayed the contractural
start date under both contracts to the maximum extent possible: February 11,
2002 for Oman and April 30, 2002 for Adgas. What this means contracturally is
more than a year to work with the suppliers. Both suppliers expect an update
on DPC when I return to the Middle East next week and both do not expect to
discuss any contract matters until the situation in India is clearer. I will
be in New Mexico through tomorrow if you want to discuss further. My phone
number is 505/336-8400.

Clay